Technology puts fizz back into cola wars

Thanks to new weaponry built with touch screens, Italian design and the latest technology, the cola wars are returning to an old battleground: the soda fountain. PepsiCo has unveiled a range of new self-serve equipment for dispensing drinks in places such as restaurants, cinemas and cafes.

Called Spire, it is Pepsi’s answer to Coca-Cola’s Freestyle, a new kind of drink dispenser that jolted the sleepy fountain business back into life four years ago by demonstrating that a soda machine did not have to be an ugly steel box with eight valves and an ice maker.

Sliding sales
Instead, the largest model of Spire looks a lot like a giant iPhone."Soda fountains in pharmacies and apothecaries, where this all started, were points of engagement where an amazing amount of creativity and innovation took place at the hands of the soda jerk," said Brad Jakeman, president of PepsiCo's global beverages group.

“But somewhere along the line, what was an experience has turned into a transaction, and that’s got to change.”

With soda sales sliding in grocery and convenience stores and other retail outlets, the new equipment offers the companies a means of introducing consumers to their products – carbonated or not – in a playful way.

"These machines are all about engaging with consumers and allowing them to drive the relationship," said Mauro Porcini, PepsiCo's chief design officer.

Determined not to let Pepsi steal Coke's thunder, Jennifer Mann, general manager of Freestyle, went on a road trip last week to show customers new, smaller models that address one of the chief complaints about Coke's machine, the floor space it occupies.

“These are not just pieces of equipment,” Mann said. “They represent a chance for us to help our customers engage with their consumers in a new way that is driving sales and traffic.”

Coke dominates the fountain business, deploying its equipment and syrups in what analysts estimate to be roughly 70 per cent of the restaurants, movie theatres, dining halls and other spots where soda is served on tap.

Coke, after all, started as a fountain business, whereas Pepsi began selling cola in bottles, avoiding a fight with its rival at the drugstore lunch counter.

The most recent innovations in fountain technology occurred about three decades ago, when bulky metal machines with six, eight or more valves started moving out from behind the counter and inviting customers to fill their own cups.

In an effort to recapture some of the magic of a drugstore soda fountain, Coca-Cola began working in 2004 to reinvent the fountain machine, a device both beverage companies had long left in the hands of third-party equipment manufacturers.

Six years later, Freestyle made its debut. It was a sleek, red retro machine with an embedded touch screen and had been designed by the same Italian company that gave Ferraris their contours.

Freestyle offered customers the chance to experiment with 80 different Coca-Cola products to concoct drinks that came out of a single dispenser in pulsating bands of colour.

Uphill battle
Suddenly, the fountain business was sexy. McDonald's is one big reason for Coke's dominance of the fountain business. The close relationship between Coke and McDonald's goes back 60 years and exemplifies the uphill battle Pepsi faces.

Some analysts, however, have been lukewarm about Freestyle."It has helped Coke's customers from a volume standpoint but not necessarily from a revenue and profit standpoint," said John Faucher, an analyst who follows the beverage industry for JPMorgan Chase.

"These machines are going to have to drive new traffic if they are really going to take off." – (New York Times)